Says second generation reforms are difficult and require broad-based national consensus.
Prime Minister Manmohan Singh on Saturday stressed on building a broad political consensus on economic reforms to put the economy on an average 9 per cent growth a year during the 12th Five-year Plan.
However, he also kept an option open to raise the target of growth rate to 9.2 per cent, if global economic environment improved and domestic inflation went down by the start of the next fiscal, when the plan period starts. “It is our hope that we should generate a broad climate in which all political parties can unite to push forward an agenda that is in broad national interest. That will be our priority number one, to push the reform process forward,” Singh told reporters after chairing a meeting of the full Planning Commission to finalise the approach paper for the next plan period.
Singh, who had embarked on the policies of economic reforms in 1991 as finance minister, said the second generation reforms were difficult and required a broad-based national consensus.
“In many cases they involve legislative action and we do not have... the type of majority that is necessary to put in place, for example, the Goods and Services Tax. We want financial sector reforms, like insurance sector reforms,” he said.
Singh said the lack of an effective national consensus on certain issues was a problem and “therefore the effort has to be to create a climate of opinion whereby all political parties would unite to push forward the reforms agenda”. He recalled that there was a lot of opposition to the reforms when they were launched in 1991.
“Subsequently we have had the governments of the Right and the Left at the Centre. In the last 20 years, broadly they have all kept to the path that was outlined by us in 1991-95.”
The approach paper to the 12th Five-year Plan, finalised at the meeting, fixed the growth rate at 9 per cent a year on an average.
“In view of uncertain global environment and domestic inflation, we have decided that it will be prudent to have a growth rate of 9 per cent which will sustain our agenda of inclusive growth,” the Prime Minister said, adding that it was feasible “only if we can take some difficult decisions”, along with large investments in infrastructure sector development and support to growth in energy.
“But, we will keep open the possibility of 9.2 per cent growth, if domestic and international conditions improve by the time 12th Plan starts,” the Prime Minister said.
At a full plan meeting in April, the Commission had examined a growth rate target of 9-9.5 per cent.
The Prime Minister also drew attention to holistic water management policy as various parts of the country were faced with rapidly increasing water stress. Singh said land acquisition had become highly controversial as he referred to the approach paper's arguments for a new legislation. The Centre has framed Draft Land Acquisition Bill, which is in the public domain. Singh added that the Planning Commission had emphasised the importance of achieving 4 per cent growth in agriculture because it provided broadbased income benefits to the rural population and also because it was necessary to avoid inflationary pressure.
So far as the 11th Plan is considered, the approach paper had talked of achieving 3 per cent growth. “The Deputy Chairman (Montek Singh Ahluwalia) has informed me that the latest estimates suggest this will be 3.3 per cent.”
